Monster Energy Co. v. Wensheng

• Decision Date: 29 September 2015
• Docket Number: Case No. 15 C 4166
• Citation: 136 F.Supp.3d 897
• Parties: Monster Energy Company, Plaintiff, v. Chen Wensheng, et al., Defendants.
• Court: U.S. District Court — Northern District of Illinois

136 F.Supp.3d 897

Monster Energy Company, Plaintiff,

v.Chen Wensheng, et al., Defendants.

Case No. 15 C 4166

United States District Court, N.D. Illinois, Eastern Division.

Signed September 29, 2015

Kevin W. Guynn, Amy Crout Ziegler, Jessica Lea Bloodgood, Justin R. Gaudio, Greer, Burns & Crain, Ltd., Chicago, IL, for Plaintiff.

John R. Crossan, Crossan Intellectual Property Law, LLC, Ramon Kumar Singh, Internal Revenue Service, Chicago, IL, Keith A. Vogt, Oak Park, IL, for Defendants.

OPINION AND ORDER

Joan H. Lefkow

, U.S. District Judge

On May 12, 2015, Monster Energy Company (MEC) filed suit against Chinese entities that have offered counterfeit Monster Energy products for sale online ("defendants")¹ alleging trademark counterfeiting and copyright infringement. (Dkt. 1.) MEC's five-count second amended complaint brings claims for (1) willful trademark infringement and counterfeiting in violation of section 32 of the Lanham Act, 15 U.S.C. § 1114

; (2) willful false designation of origin in violation of section 43 of the Lanham Act, 15 U.S.C. § 1125 ; (3) willful cybersquatting in violation of section 43(d) of the Lanham Act, 15 U.S.C. § 1125(d) ; (4) willful violation of the Illinois Uniform Deceptive Trade Practices Act, 815 ILCS § 510 et seq. ; and (5) deliberate copying of MEC's copyrighted designs in violation of the Copyright Act, 17 U.S.C. § 501(a)

. (Dkt. 53 (Second Am. Compl.) ¶¶ 34–62.) On May 20, 2015, the court entered a temporary restraining order (TRO) freezing defendants' PayPal accounts. (Dkt. 22.) The court converted the TRO to a preliminary injunction on May 27, 2015. (Dkt. 33.) Two defendants, Wu Zou d/b/a the Internet Store Legend Trading Co., Ltd. ("Legend Trading") and Zhang Yuan d/b/a Internet Store mqxxc, have moved to dismiss for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2) and to release the frozen funds. (Dkts. 50, 57.) For the reasons stated below, defendants' motions are denied.²

BACKGROUND³

In 2002, MEC launched its MONSTER ENERGY® brand of drinks bearing its now famous MONSTER ENERGY mark and design. (Second Am. Compl. ¶ 5.) MEC is the owner of numerous valid trademarks. (Id. at 14–15.) In addition to its MONSTER™ line of energy drinks, MEC uses its Claw Icon mark, MONSTER™ mark, MONSTER ENERGY® mark, and has copyrighted designs in connection with a large variety of products, including stickers, helmets, sports gear, clothing items, headgear, and sports bags (the Monster Energy Products). (Id. ¶ 8; see also dkt. 88 (Kingsland Dec.) ¶ 4.) Due to its substantial and continuous marketing and promotion, MEC's MONSTER™ family products have achieved substantial commercial success, with estimated retail sales exceeding $5 billion per year worldwide. (See Second Am. Compl. ¶ 13.) MEC has also sold millions of dollars' worth of MEC's MONSTER™ family of products to Illinois residents through brick and mortar accounts such as 7–Eleven, Walmart, Costco, Sam's Club, CVS, Target, and Circle K, to name a few. (Kingsland Dec. ¶ 7.) The success of the Monster Energy brand has resulted in its significant counterfeiting, giving rise to the present claims. (See Second Am. Compl. ¶ 25.)

Legend Trading and mqxxc created and operated commercial, fully interactive Internet stores on the global marketplace AliExpress.com (AliExpress). (Id. ¶ 23; see also dkts. 87 at 3, 89 ¶ 2, 92 at 3, 94 ¶ 2.) AliExpress is an English language global retail marketplace for Chinese sellers to target and sell to consumers worldwide. (Dkts. 87 at 3, 92 at 3; see also dkts. 89, 94 (collectively, Martin Decs.) ¶ 5.) Through AliExpress, Chinese sellers learn techniques for targeting United States buyers. (Dkt. 90, 95 (collectively, Fu Decs.) ¶¶ 21–22.)

Each defendant through its Internet store targets and offers to sell counterfeit Monster Energy Products to consumers within the United States, including Illinois. (Second Am. Compl. ¶ 23.) Defendants' offers to sell consist of displaying photographs of counterfeit Monster Energy Products and inviting potential buyers to buy products through their Internet stores. Then, defendants have the ordered items shipped to the United States. (See id. 35–36; see also Martin Decs. ¶ 6.) In creating their online stores, defendants affirmatively select a shipping template to ship their products, including counterfeit Monster Energy Products, to the United States and Illinois. (See id .; see also Martin Decs. ¶¶ 7–8; Fu Decs. ¶¶ 3–14.)

ANALYSIS

I. Personal Jurisdiction

A. Legal Standard

Rule 12(b)(2)

permits dismissal of a claim based on lack of personal jurisdiction over the defendant. See Fed. R. Civ. P. 12(b)(2). The party asserting personal jurisdiction bears the burden of proof. See Purdue Research Found. v. Sanofi–Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir.2003). When the court rules on the motion without a hearing, the plaintiff need only establish a "prima facie case of personal jurisdiction." Id. (quoting Hyatt Int'l Corp. v. Coco, 302 F.3d 707, 713 (7th Cir.2002) ). The court will "read the complaint liberally, in its entirety, and with every inference drawn in favor" of the plaintiff. Cent. States, 440 F.3d at 878 (quoting Textor, 711 F.2d at 1393 ). Jurisdictional allegations pled in the complaint are accepted as true unless proved otherwise by affidavits or exhibits. See Purdue Research Found., 338 F.3d at 782. But "once the defendant has submitted affidavits or other evidence in opposition to the exercise of jurisdiction, the plaintiff must go beyond the pleadings and submit affirmative evidence supporting the exercise of jurisdiction." Id. at 783. If any conflicts arise between the plaintiff's complaint (or supporting materials) and the defendant's affidavits or evidence, the plaintiff is entitled to have those conflicts resolved in its favor. Id.

B. Court's Review of Personal Jurisdiction

Plaintiff asserts claims under the Lanham Act, Copyright Act, and Illinois statutory law. Because neither the Lanham Act nor the Copyright Act authorizes nationwide service of process, a court sitting in Illinois may exercise jurisdiction over defendants only if authorized both by the United States Constitution and Illinois law. be2 LLC v. Ivanov, 642 F.3d 555, 558 (7th Cir.2011)

(citing Fed. R. Civ. P 4(k)(1)(A) and stating that the Lanham Act does not authorize nationwide service); Tamburo v. Dworkin, 601 F.3d 693, 700 (7th Cir.2010) (same); Janmark, Inc. v. Reidy, 132 F.3d 1200, 1201 (7th Cir.1997) (Copyright Act does not authorize nationwide service), abrogated on other grounds by Advanced Tactical Ordnance, LLC v. Real Action Paintball, Inc., 751 F.3d 796 (7th Cir.2014). The Illinois long-arm statute "permits its courts to exercise personal jurisdiction on any basis permitted by the constitutions of both Illinois and the United States." Id. ; 735 Ill. Comp. Stat. 5/2–209(c). Accordingly, "the state statutory and federal constitutional inquiries merge." Tamburo, 601 F.3d at 700.

The key constitutional question is whether the defendants have sufficient "minimum contacts" with Illinois such that the suit "does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945)

(internal quotations marks omitted). That is to say, each defendant must have purposely established minimum contacts with the forum state such that he or she "should reasonably anticipate being haled into court" there. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (quotation marks omitted). A defendant cannot avoid jurisdiction "merely because the defendant did not physically enter the forum State." Id. at 476, 105 S.Ct. 2174. Indeed, as the Supreme Court has observed, "a substantial amount of business is transacted solely by mail and wire communications across state lines, thus obviating the need for physical presence within a State in which business is conducted." Id.

Nevertheless, "[p]otential defendants should have some control over—and certainly should not be surprised by—the jurisdictional consequences of their actions." RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1278 (7th Cir.1997). The Due Process Clause "gives some minimum assurance as to where that conduct will and will not render them liable to suit." World–Wide Volkswagen v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980).

Under the Illinois long-arm statute, personal jurisdiction may be general or specific. uB ID , Inc. v. GoDaddy Grp., Inc ., 623 F.3d 421, 425 (7th Cir.2010)

. MEC does not argue that the court has general jurisdiction. Accordingly, the court turns to whether it has specific jurisdiction over defendants.

1. Specific Jurisdiction

Specific jurisdiction grows out of "the relationship among the defendant, the forum, and the litigation." Walden v. Fiore, ––– U.S. ––––, 134 S.Ct. 1115, 188 L.Ed.2d 12 (2014)

(quoting Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 775, 104 S.Ct. 1473, 79 L.Ed.2d 790 (1984) ). Specific jurisdiction requires that "(1) the defendant has purposefully directed his activities at the forum state or purposefully availed himself of the privilege of conducting business in that state, and (2) the alleged injury arises out of the defendant's forum-related activities." N. Grain Mktg., LLC v. Greving, 743 F.3d 487, 492 (7th Cir.2014) (quoting Tamburo, 601 F.3d at 701 ). "The exercise of specific jurisdiction must also comport with traditional notions of fair play and substantial justice." Id. (citing Tamburo, 601 F.3d at 702 ).

a. Minimum Contacts—Whether Defendant's Activities Were Purposefully Directed At Illinois

Whether a defendant has purposefully directed activities at a forum "depends in large part on the type of claim at issue." Felland v. Clifton, 682 F.3d 665, 674 (7th Cir.2012)

. Where the plaintiff's claims are for intentional torts, as here,⁴ the inquiry "focuses on whether the conduct underlying the claims was purposely directed at the forum...